Gentle introduction to cryptocurrency exchanges

The greatest problem with both, online and mobile wallets is that it’s very difficult to exchange between dollars and bitcoins from them. You can’t easily add your credit card to your account. That’s where you may want to need those cryptocurrency exchanges.

A cryptocurrency exchange is an online or a mobile platform with a built-in trading functionality that lets you buy/sell and store cryptocurrencies, such as bitcoin, ethereum etc.

You don’t have to have a broker or a huge sum of money to start trading on cryptocurrency exchange markets

Relative anonymity is why technocrats of the brave new world rush into the market, too. In most cases there’s no need to verify your identity if you want to start moving your cryptocurrency funds from/to those platforms. Keep in mind, though, if you want to withdraw or deposit fiat money (USD or Euro) you will normally have to provide those platforms with a variety of papers. Such as your utility bill or/and a bank statement, or/and your ID — there are options out there depending on an exchange website.

Here are three more things for you to think about before you sign up to one of those cryptocurrency exchange markets.

  1. Do you want to transfer your personal information into the database of the platform that might be prohibited in your country or in the country you’re planning to go? Find out here if you’re allowed to use cryptocurrencies where you are or where you want to be in the near future.
  2. Please look into the tax laws of your own country to find the specific details. What is pretty much global, is that buying Bitcoin or any other cryptocurrency is not in itself taxable. However, you are likely to be taxed when you sell or even spend those coins and make a profit. How much depends on the amount of gains, how long you owned the coins and if and how your country taxes capital gains. ©
  3. Cryptocurrency exchange markets own your money at any given moment of time and promise to give you your funds on demand. But do they keep their promise always? Take a look.

So — yes, it’s dangerous to keep all your funds on the same platform for a long time. Try to use at least two of them.

Here’s a quick reminder, though, why more and more investors trade cryptocurrencies on the exchange markets regularly.

Volume of cryptocurrency trading at the most significant stock exchanges, end November 2017 https://coinmarketcap.com

Several options:

WEX

pros

  • Anonymity — you don’t need to verify your account to deposit or withdraw cryptoassets
  • Beginner friendly interface
  • 2FA
  • White list of safe IP addresses you may want to add and sign in from
  • No fees for cryptomoney deposits
  • Users wishing to deposit/trade/withdraw cryptocurrencies are not required to verify their account

cons

  • You cannot withdraw fiat money without verification due to the AML/KYC policy
  • You cannot trade from the USA, Bosnia and Herzegovina, Democratic People’s Republic of Korea (DPRK), Ethiopia, Iran, Iraq, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu, Yemen
  • No mobile app
  • Was implicated in a money laundering scandal end July 2017
  • Low trade volumes
  • 0,2% fee per trade (expensive!)
  • 0,001 BTC fee for Bitcoin withdrawal

Bitfinex

pros

cons

Poloniex

pros

  • Poloniex is Crypto-Crypto only. You cannot use fiat money here
  • Convenient interface
  • 4-levels verification (for different daily withdrawal limits)
  • 2FA
  • No fees for cryptocurrency deposits
  • Dynamic withdrawal fees charged by the blockchain itself, not by Poloniex
  • Poloniex offers Bitcoin, Ethereum, Litecoin, Stellar, Ripple, Bitcoin Cash, Ethereum Classic and about 90 other coins. New coins seem to be added weekly

cons

  • Poloniex is Crypto-Crypto only. You cannot use fiat money here
  • Trading fees
Being a market taker means that the market dictates you at which price you enter trade. Being a market maker means that you force the market to give you the price you choose
  • Community feedback is pretty negative
  • Poor customer support
  • Verification time: 4 days to 6 weeks
  • In contrast to above mentioned exchanges, on Poloniex, you would need to verify your account in order to withdraw your cryptofunds. Many users make a mistake on this exchange, though — doing the trading but not verifying their account. In such cases their money get stuck for days/weeks and sometimes for months
Get through the process of at least 3-levels verification first and then start trading on Poloniex. This is how you know that your funds are safe to withdraw whenever you want
  • Poloniex does not offer services in the following states: New Hampshire, New York, Washington, — and in… Crimea, Russia.

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